With speculative positioning growing before the New York sessions multiple economic releases, event risk and expectations for sharp moves were running high. However, the predicted levels of volatility never came to pass as nearly every indicator printed close to its respective consensus. For most of the majors, the letdown led to range trading that was more reserved than yesterdays fundamentally-inactive session.
For the EURUSD, the post-data reaction printed a new high at 1.2845, but the steady 60-point drop afterwards left the pair floating in the middle of congestion. The Japanese yen yielded 55 points to the US dollar on todays tepid numbers to mark a standing double top on 118.35. Mirroring the euro pair, the USDCHF widened its active range to 55 points, but most of trading was within 20-points of 1.2495 resistance. Finally, the GBPUSDs modest move was disappointing after its recent 100-plus point swings. A peak to trough 85-point session range settled to the 35-point trading environment prior to the days releases.
Market participants were preparing for an active session Thursday especially after fewer, and historically less market moving, indicators on Tuesday raised the volatility bar. These predictions proved overstated when all was said and down though. The first indicator set for release in an evenly staggered calendar set the tone for the rest of the day. Octobers Consumer Price Index had a heavy market bias attached to it even before the actual numbers ran across the tape. Last weeks 2.0 percent drop in the import price gauge and Tuesdays report of a historical plunge in headline producer prices had numbed traders to a potential turn in the CPI, even as economists called for no change from the core measurements. As was heavily expected, both headline periods slipped for new lows. These numbers aside though, the real interest was in core changes. With the monthly indicator expanding only 0.1 percent through October, the annual measurement was finally knocked off of its steadily accelerating pace. Slowing for the first time since February, the indicator printed 2.7 percent growth compared to the decade-high 2.9 percent notched in September. From the breakdown, it was obvious that there were few core components supporting greater underlying price growth. Of the nine broad component groups, only four were rising modestly. In contrast, a 3.1 percent drop in the transportation complex, 1.4 percent easing in commodities and sizable 7.0 percent contraction in energy costs worked to pull the reports lower. On the other hand, even though the core figure slipped from its high, the dip was modest in comparison to the earlier PPI; and expectations for an immediate change in the Feds outlook were rebuffed.
With breakout traders left empty handed in the minutes after the inflation report, the market shifted its attention to the number of indicators still on deck. The next headline of import was the TICS report of net foreign purchases of US securities. Following a record month, the $65.1 billion surplus through September fell slightly short of expectations but measured up well to the favorable turn in the physical deficit of the same period. The most important takeaway from overall indicator was the first net sale in treasuries in 42 months. Wadding along through the reports, industrial activity came into focus with Octobers factory production report and the Philly Feds survey of manufacturing. Factory output for last month grew 0.2 percent, helping to lighten the load the large drop in the ISM figure saddled on the sector. For a more current read, manufacturing in the Philadelphia area produced the second regional improvement. The final say for the day came from the housing sector. Measuring homebuilder optimism, the November NABH index grew to 33 from 31 the month before. With the first back-to-back rise since June of last year, this indicator offers some hope that the housing decline could find a level of support soon.
Equities markets were not put off by the nuances of a favorable price gauge, as a rally around recent mergers and earnings was extended. The S&P 500 led the pack in a 0.24 percent advance to 1,399.94 by 16:20 GMT. Trailing behind the Dow moved 0.22 percent to a new high at 12,278.68 while the Nasdaq Composite rose 0.08 percent to 2,440.70. Among the headliners in the stock market, Dell Inc.s shares dropped 3.6% on a $0.93 move to $24.82 after the SEC pursued its accounting probe into the computer marker.
Optimism in the Treasury pits with a drop in inflation was handily put off by the lack of interest in the security revealed in the TICS report. T-notes were only 1/32nd higher at 100-03 with yields off a basis point to 4.611 by 16:20 GMT. T-bonds advanced 2/32nds to 96-28 of face though its own yield went unchanged at 4.696.
